Electrolux Refrigeration Plant Theory of Constraints Case Study OLD

The following client has achieved substantial results with TOC after Lean and some Six Sigma practices where already embedded in the organisation. So if you have already implemented Lean or Six Sigma here is proof that you can leverage your system even further. This client operates an 11 hectare plant with more than 580 employees

Brought production for a product back into Australia from low cost country

Generated $3m in cash from a $30k investment

All new model projects on time, on budget and on quality (30% less time required than previously)

Quality continues to improve with 85% new SKU’s, Exported product to China, Bank of hardy perennial problems being resolved very quickly using TOC thinking tools, Stable workforce and increasing in number as the company grows, Skills now inbound, General Manager gets a lot of thinking time to work on the business.

“TOC is the best method for building common understanding and agreement that I have seen in over 2 decades in industry that has taken me around the world” Jason Furness, GM, Electrolux Refrigeration

Profitability

Profits increased by $19.2m 2009 up by 59% during the worst economic conditions since the Great Depression

Margins increased from 5% in 2007 to 13.5% in 2009 (during a global recession)

Cash

Additional $20m released into the system by reducing inventory

50% increase in exports 2008

Zero investment?AUD at 92c USD

Won back $14m in sales for Sept 09 qtr

yielding $3m extra in cash?for a $30,000 investment

All new model projects delivered on time

On budget, On quality

Finished Good Inventory Reduction

From 40 days cover in Aug 07 to 12 days cover June 09Cost Reduction Projects

Direct material cost reduction saving $2.5m more than budget Expecting $4.1m by end of year 2009

Production Plant Flexibility

From building to a 3 month forecast in 2007 to responding to customer orders in 3 days.

Quality

Warranty call rate down by 50% to 4.75% on 2 years ago. The lowest it has ever been. Electrolux are setting records in this area?and continues to improve with new SKU's on 85% rating (first trial builds)

Hardy perennial problems being solved systematically

People

Workforce is stable (and happy by and large)

Increasing because we need more people?Skills are now transferred into the company ?People are approaching the company to work here. 18 months prior we struggeld to attract people.

Electrolux in the community

Regarded very highly within the region as an employer of choice (see local press feature article)?2007 receiving poor media reports, 2009 Electrolux success being publicised in the region through local media.